According to Canalys’ latest findings, global wearable band shipments grew 0.2% in Q2 2024 to 44.3 million devices. Basic watches continued to drive the market, with shipments up 6% year on year, largely thanks to Huawei and Xiaomi. Basic watches accounted for 48% of the wearable band market, their highest share yet. Smartwatch shipments remained static compared with Q2 2023, as the positive momentum from Samsung, Garmin, Huawei and Google offset Apple’s decline. Basic band shipments continued on their downward trend, falling 14% year on year.

“Basic watches continue to support the wearable band market,” said Canalys Research Manager Cynthia Chen. While last year’s strong basic watch growth came from local leaders in India, the latest growth was mainly driven by Huawei and Xiaomi, which accounted for 15% and 13% of global basic watch shipments respectively. “Both vendors did particularly well in Greater China, thanks to effective pricing strategies and incorporating premium fitness tracking into affordable basic watch models. The largest basic watch vendors have prioritized volume during recent quarters and will need to pivot toward brand awareness and positioning to realize their ambitions of moving upmarket. Strategic partnerships, such as Xiaomi’s ability to leverage Suunto’s advanced algorithms, will be important to elevate both product offerings and brand positioning.”

“Wearable band vendors are increasingly diversifying their portfolios to capture new opportunities, focusing on new segments, technologies and software,” said Canalys Research Analyst Jack Leathem. “Device ecosystem vendors are increasingly exploring eSIM-enabled watches supporting 4G/5G connectivity, aiming to expand their partnerships with telcos in addition to exploring new potential revenue streams. The uptake of cellular-enabled wearable bands remains modest at 45% in Q2 2024, though it is of growing interest to both vendors and telcos.” Google’s two-year complimentary cellular subscription on the new Pixel Watch 3 in the US through Google Fi will serve as a critical test of this strategy. “Furthermore, more vendors are launching advanced sport watches into the market, such as Xiaomi’s Watch S4 Sport and Samsung’s Galaxy Watch Ultra, seeking to reach a wider audience, elevate their premium flagships further and take a share of a segment that significantly outperformed the market in 2023.”

“Smartwatch shipments returned to growth following six consecutive quarters of decline, though only by a modest 0.1% year on year in Q2 2024,” said Leathem. The exception in a struggling segment has been Garmin, which grew its shipments by 16% this quarter, thanks to strong consumer demand and increased advertising spend. “The return to growth brings some positivity back to vendors ahead of the holiday shopping season and vendor product launches in H2.”

“Canalys anticipates double-digit growth in smartwatch shipments in H2 2024, driven by new offerings from Apple, Samsung and Google”, said Chen. “These ecosystem vendors are set to introduce advanced health and fitness tracking features to counter Garmin’s ongoing success, spurring a wave of device upgrades. To succeed in this competitive market, smartwatch vendors must deliver significant improvements in health tracking and battery life over previous generations. Continued growth in the basic watch segment is also expected, with vendors such as Xiaomi and Huawei needing to maintain aggressive pricing while adding further premium features to attract consumers. As smartwatches return to significant innovation, competition in the wearable market is set to intensify.

Growth in both the smartwatch and basic watch categories can be sustained in the short term, but over the coming years, these segments may begin to cannibalize each other as they increasingly target similar features and markets. To prevent this, smartwatch vendors must introduce new differentiators or use cases, such as gesture controls or GenAI integration, which leverage the superior computing power of smartwatches. These advanced features will be vital to maintain the appeal of smartwatches, as basic watches, which lack these capabilities, will eventually hit a ceiling in terms of functionality and innovation.”